The New Energy Economy: 3 Trends Transforming the Industry

Massive disruption has been happening in the energy and utilities (E&U) industry, but what used to be a slow, glacial melt is now turning into a swift stream before our eyes (rather like what our actual glaciers are doing now). Global demand for renewable energy is booming. Utilities are in the climate change race and making big investments in carbon capture and super-grid technology to meet 2050 climate goals. They’re competing with leading tech disruptors like Tesla, who are offering energy supply alternatives like solar roof panels and battery farms. And energy customers, once passive consumers, are now empowered to choose the types of power they buy and who they buy it from – including generating their own power.

It’s a paradox. The power monopolies of the past no longer call the shots, but their role has never been more important or complex. Three fast-growing trends – decentralized power sources and technologies, the rise of decarbonization, and a democratized energy market that gives customers more control – are challenging the industry. Let’s explore what these trends mean and how utility companies are keeping up.

Trend #1: Decentralized operations are creating more complexity for grid managers

From coal and natural gas to solar and wind, the ways we are generating power are more diverse than ever. 

The state of Florida is a good example. Their plants use natural gas, coal, solar, and nuclear power, among others. Collecting, distributing, and measuring usage among these sources is challenging enough, but the mix of fuels their power plants use is also constantly changing. From 2008 to 2019, coal usage fell from 29 million to nine million tons. During the same period, solar energy grew in popularity as local companies began investing in photovoltaic and thermal energy tech. With Florida’s abundant sunshine, it should continue to skyrocket.

Florida’s changing energy landscape is hardly unique. Across the globe, the complexities of a fragmented landscape are enormous. This requires utilities to do the following:

• Keep pace with a growing demand for power
• Transmit, distribute, service, and sell multiple fossil fuel and renewable energy services and products, often to the same customer
• Maintain reliable connections between systems and validate accurate data collection
• Maintain collaborative relationships with competing energy suppliers
• Support customers and medium-scale new entrants who generate their own power supply

For utilities, decentralization complicates operations. Employees are using multiple systems and rules to manage grid conditions and distribution. To optimize grid performance, utilities must collect data from disparate systems and businesses using different technologies. It takes more sophistication to quickly spot trends. Sometimes optimizing for one metric impacts another. This can create a perfect storm that brings a whole grid down, such as what happened in the big Texas freeze in February 2021. The same choices that kept prices low (choices about interconnections, how much to protect gas lines, and to prioritize retail margins) also resulted in catastrophic failure to provide basic service.

Complex operating models are usually hidden from customers to simplify their engagement. But what if utilities could use grid insights to make customers their allies in the efficient distribution and use of energy? For example, with a connected platform, utilities can accelerate DER onboarding, run strategic analysis on grid operations, and communicate with impacted customers in real-time. Connecting data streams, partners, and customer relationships enables utilities to flexibly adapt to the new complexities of decentralized grid optimization. 

A great example of this is National Grid. In the UK, more renewable power must connect to the existing electricity grid. As National Grid tried to ramp up the onboarding of renewables, they had to work with processes originally designed for connecting traditional power suppliers (coal, gas, nuclear). These included specifications, detailed language, and countless rules that were an engineering challenge. To simplify these processes and rationalize them for renewables, National Grid used Sales Cloud and Experience Cloud to develop ConnectNow, a portal that aims to streamline the onboarding of new connections and deliver an end-to-end experience.

National Grid wanted to become more proactive and gather feedback to make improvements during the development process. Using Salesforce combined with an interactive and dynamic approach to development, National Grid delivered the first stage of ConnectNow in five weeks.

Trend #2: Decarbonization is changing the industry for good

A 2020 report from the U.K. indicates the cost to generate renewable energy is about half of what was expected 10 years ago. In the U.S., the amount of power generated by solar and wind has reached record levels while coal and natural gas plants are closing.

Besides measuring the carbon footprint generation, today’s customers also expect their utility companies to educate them on how renewable power helps them save money. E&U companies are becoming advisors who provide guidance on everything from programmable thermostats to the benefits of geothermal.

To meet customer expectations, utilities are turning to artificial intelligence (AI) to help. Predictive analytics uses historical data and machine learning to predict the likelihood of future events. E&U providers can use it to uncover insights about consumer preferences, motivations, and propensity to adopt sustainable behaviors. This can lead to better energy management advice accompanied by product recommendations.

An intelligent, connected platform can also support a utility’s decarbonization efforts by doing things like tracking capital investments from start to finish and digitizing maintenance of low carbon generation assets.

Trend #3: Democratization puts customers in control of their energy

Today, more utilities are letting customers choose the type and mix of power they buy. Many utilities also act as brokers or clearinghouses for electric vehicles (EVs), charging stations, and solar installers.

These new options are helping customers take greater control of their relationships with a growing ecosystem of providers. As customers look for information and guidance in this evolving marketplace, utilities need to deliver connected and consistent experiences in real-time through multiple channels.

To do this, utilities must adopt digital channels and self-service tools. For example, a portal with automated workflows can help customers set up their accounts and bill payment, learn more about products and services, and get help with installing solar panels and batteries. Utilities can also make these experiences easier by optimizing offers. For instance, some utilities use the customer’s usage history and DER footprint to calculate the best time of use rates for them.

Keep up in a changing energy economy

With the right technology to provide a complete view of data, utilities can optimize operations, satisfy customers, and provide the renewable energy options that align with each residential customer’s lifestyle, as well as the unique energy needs of each business they serve.

Want to learn more about the trends to watch in energy and utilities? Check out our guide that covers the ways E&U companies are adapting to the new energy economy.